UK finance minister backs off welfare cuts amid £28bn shortfall

2026-10-30 · Economy · United Kingdom

John Healey backed away from cutting the cost of welfare this parliament amid warnings that his first budget could lead to brutal spending cuts because of a £28bn shortfall in public finances. The chancellor said welfare will cost more than 11% of UK economic output in 2026 and that any cuts will be done "in a Labour way", while also saying the government has a "moral duty" to help young people out of work. Experts criticised the "scattergun" budget for ducking big tax and spending decisions, and think tanks warned living standards will fall, with growth grinding almost to a halt.

Why it matters：The UK's fiscal gap means either welfare cuts or tax rises are likely, with consequences for households and for the government's political credibility.

Key points

• Public finances face a £28bn shortfall.
• Welfare is set to cost more than 11% of output in 2026.
• Think tanks warn living standards will fall.

Sources (original reporting)

• The Guardian
• The Straits Times
• BBC

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